TA Associates Buys Into Dr Lal PathLabs

TA Associates has acquired just over a 16% stake in Dr Lal PathLabs, an Indian provider of diagnostic and pathology services, from Sequoia Capital India for approximately $35 million. The stake represents around one half of Sequoia’s overall position in Dr Lal PathLabs.


TA Associates, a leading global growth private equity firm, today announced a minority investment in Dr Lal PathLabs (LPL), one of India’s largest chains of pathology laboratories, by purchasing half of Sequoia Capital’s stake. Sequoia Capital has been an investor in Dr Lal PathLabs since 2005.

Dr Lal PathLabs was founded in New Delhi in 1949 by Dr. (Major) S.K. Lal as a single laboratory in central Delhi. Today, the company, under the stewardship of Dr. Arvind Lal, Chairman, and Dr. Om Manchanda, CEO, has grown rapidly to become one of the country’s largest diagnostic networks comprising two state-of-the-art central laboratories, 55 satellite laboratories, 850 collection centers and 2,500 pick-up points.

“Dr Lal PathLabs is an exciting growth story and a highly compelling investment opportunity,” said Naveen Wadhera, Director, TA Associates Advisory Pvt. Ltd., who will join the company’s Board of Directors. “Over the last 60 years, LPL has made a name for itself, particularly in Delhi and the National Capital Region, by providing the highest quality diagnostic lab tests and service levels to consumers. The company has achieved especially strong growth recently under the leadership of Dr. Lal and Dr. Manchanda, and we anticipate significant growth opportunities through geographical expansion and the strong secular drivers propelling the Indian healthcare industry.”

“We are happy to partner with TA Associates to continue to support the ambitious growth plans of the company,” said Sandeep Singhal, Managing Director, Sequoia Capital India. “I am confident that Dr. Lal and Dr. Manchanda, who have built one of the strongest healthcare franchises in India, will continue to out-execute and out-perform competition in this space.”

Dr Lal PathLabs offers a range of more than 1,700 diagnostic tests to consumers, from routine biochemistry tests to more complex molecular tests, and tested over three million patients in the last fiscal year. The company is accredited by the College of American Pathologists and the National Accreditation Board for Testing and Calibration of Laboratories, and has achieved ISO 9001 2000 certification for its laboratories.

“TA Associates and Sequoia Capital form an ideal investor group for our company,” said Dr. Arvind Lal, Chairman, Dr Lal PathLabs. “TA brings a wealth of healthcare investment experience, a fast-growing presence in the Indian market, and top-flight strategic resources that will enable our company to continue its strong growth trajectory. Sequoia Capital remaining as a shareholder and board member is a strong positive of this deal as we can continue to benefit from their ability to add value to achieve our objectives.”

Dr. Om Manchanda, CEO, Dr Lal PathLabs, said, “Over the last five years, LPL has built a formidable management team, which has in-depth exposure in the healthcare space on the back of diverse industry experience. LPL has so far been concentrating on greenfield expansions. Now, we are embarking on an aggressive growth plan that includes acquisitions. By the end of 2011, we are intent on having a 100-strong laboratory network, 1,000 collection centers and 3,000 pick-up points across India. The presence of both TA Associates and Sequoia Capital on the LPL board now gives us the leverage of accessing funds for adopting this ambitious growth plan. The LPL team looks forward to receiving strategic inputs from TA Associates, which has invested in healthcare companies around the world.”

TA Associates has more than four decades of investing experience, focusing on profitable growth companies. TA’s prior investments in the healthcare sector include Alere Medical, AmeriChoice, CompBenefits, Invitrogen, MQ Associates, National Imaging Associates, Triumph HealthCare and Twin Med. TA’s previous investments in India include GlobeOp Financial Services, Idea Cellular and Micromax Informatics Limited.

TA Associates Advisory Pvt. Ltd. provided advisory services to TA Associates in India. Ernst & Young served as financial advisors and Lexygen and Goodwin Procter provided legal counsel to TA Associates. JM Financial served as financial advisors, and Luthra & Luthra and AZB provided legal counsel to Dr Lal PathLabs and Sequoia Capital, respectively.

About Dr Lal PathLabs

Dr Lal PathLabs is India’s leading diagnostics and pathology services company. The company has a distinguished track record of providing medical diagnostic services in India for over 60 years. Its operations incorporate state-of-the-art testing equipment and methodologies and strongly leverage advanced communication infrastructure. Dr Lal PathLabs offers today the widest range of testing parameters available under one roof in India. For more information, please go to www.lalpathlabs.com.

About TA Associates

Founded in 1968, TA Associates is one of the largest and most experienced middle market private equity firms. The firm has invested in over 400 companies and manages more than US $16 billion in capital. With offices in Boston, London, Menlo Park and Mumbai, TA Associates leads buyouts and minority recapitalizations of profitable growth companies in the technology, financial services, business services, healthcare and consumer industries. More information about TA Associates can be found at www.ta.com.

About Sequoia Capital

Sequoia Capital currently manages funds capitalized at close to US $1.8 billion and invests across venture, growth and late stage opportunities in India. It takes a long term view on investments and plays the role of an active, value added partner to entrepreneurs, business families and management teams. Over the last nine years, Sequoia Capital has invested in more than 50 Indian companies, including Café Coffee Day, Comviva (Bharti Telesoft), Dr Lal PathLabs, Edelweiss, Firstsource, GVK Biosciences, Idea Cellular, Ind-Barath Power, Just Dial, Shaadi.com and SKS Microfinance. Sequoia Capital operates out of offices in Bangalore, Mumbai and New Delhi.

Globally, Sequoia Capital has an unparalleled track record of partnering with entrepreneurs to create global market leaders. Sequoia Capital has been an early investor in companies such as Google, Cisco, Yahoo, YouTube, Oracle and Apple Computers. Sequoia Capital maintains dedicated teams in the U.S., China, India and Israel.

For more information, kindly visit: http://www.sequoiacap.com/india.